Let’s say you have $1 million in outstanding invoices. It’s a great feeling… well, sort of…See, the problem is that until you have that money in hand, you really can’t do a whole lot. Sure, you know that it’s coming, but if you have a whopping zero balance in your bank account, you’re almost as limited as if you had no invoices on their way at all.
In this type of situation, you do have choices, of course:
1. Pay everything with credit until the invoices roll in and then pay off the credit on time, incurring no penalties.
2. Sell a portion of your invoices to a third party so you can get at least a part of what you’re owed immediately.
3. Call your creditors and try to negotiate a new time to pay, hoping they don’t sock you with some kind of interest.
4. Change the way you handle your invoicing.
Obviously, if you’re already in a bind, you may have to choose 1-3, but if you’re not quite in a precarious situation yet, I’d recommend hiring a CPA or CFO to help you change the way you handle your invoicing.
Just being “owed” isn’t going to cut it. You need to have money available to pay bills, make payroll and invest in opportunities, continuing education, marketing, etc. So if the above scenario has happened to you at least once, it’s time to figure out a better way to make your cash flow.
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